Social Security Keeps 20 Million Americans Out of Poverty:
A State-By-State Analysis

Related Areas of Research

Social Security benefits play a vital role in reducing poverty. Without Social Security, according to the latest available Census data (for 2008), 19.8 million more Americans would be poor. Although most of those kept out of poverty by Social Security are elderly, nearly a third are under age 65, including 1.1 million children. (See Table 1.) Depending on their design, reductions in Social Security benefits could significantly increase poverty, particularly among the elderly.

TABLE 1: Effect of Social Security on Poverty, 2008

Age Group

Percent in Poverty

Number Lifted Out of Poverty by Social Security

Excluding Social Security

Including Social Security

Children Under 18

20.5

19.0

1,117,000

Adults Aged 18-64

14.5

11.7

5,281,000

Elderly Aged 65 and Over

45.2

9.7

13,410,000

Total, All Ages

19.8

13.2

19,808,000

Memorandum:

Women Aged 65 and Over

49.7

11.9

8,120,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2009.

Social Security Lifts 13 Million Elderly Americans Out of Poverty

Almost 90 percent of people aged 65 and older receive some of their family income from Social Security. [1] Without Social Security benefits, 45.2 percent of elderly Americans would have incomes below the poverty line, all else being equal. With Social Security benefits, only 9.7 percent are poor. Some 13.2 million elderly Americans are lifted out of poverty by Social Security.

Social Security reduces elderly poverty dramatically in every state in the nation, as shown in Figure 1 and Table 2. Without Social Security, the poverty rate for those aged 65 and over would exceed 40 percent in 42 states. With Social Security, the elderly poverty rate in the large majority of states is less than 10 percent. Social Security lifts 1.1 million elderly people out of poverty in California and Florida, almost 900,000 in Texas, and 800,000 in New York.

Social Security Lifts More Than 1 Million Children Out of Poverty

Social Security is important for children and their families as well as for the elderly. About 6 million children under age 18 (8 percent of all U.S. children) lived in families that received income from Social Security in 2008, according to Census data. Over 3 million children received their own benefits as dependents of retired, disabled, or deceased workers. Others lived with parents or relatives who received Social Security benefits. In all, 1.1 million children are lifted out of poverty by Social Security.

Social Security records show that 3.2 million children under age 18 qualified for Social Security payments themselves in December 2009. (See Table 3.) Of these, 1.3 million were the survivor of a deceased worker. Another 1.6 million received payments because their parent had a severe disability. And 301,000 children under 18 received payments because their parent or, in some cases, grandparent was retired. [2]

Technical Note

This analysis uses the official definition of poverty used by the Census Bureau. In determining poverty status, the Census Bureau compares a family’s cash income before taxes with poverty thresholds that vary by the size and age of the family. The poverty thresholds in 2008 were $10,326 for an elderly individual, $13,014 for an elderly couple, and $22,025 for an average family of four. To calculate the anti-poverty effects of Social Security, we determined each family’s poverty status twice — first excluding and then including the family’s Social Security benefits.

Our analysis uses data from the Census Bureau’s Current Population Survey (CPS), the survey that is used to produce official poverty estimates. [3] Each March the CPS collects information on personal income, health coverage, and other social and economic characteristics for the previous year. The national estimates reported here are for 2008. The state-by-state estimates are based on a three-year average (for 2006, 2007, and 2008) to improve the reliability of the results.

One critic of estimates such as these argues that they “do nothing to answer the question of what would have happened if Social Security had not existed.”[4] Indeed, this analysis does not take into account other changes that would occur in the absence of Social Security. If Social Security did not exist, most elderly individuals likely would have saved somewhat more and worked somewhat longer.

Other studies confirm, however, that Social Security has made a very large contribution to reducing poverty, and that cutting Social Security benefits could substantially increase poverty among the elderly.[5]

TABLE 2: Effect of Social Security on Poverty Among the Elderly by State, 2006-2008

Percent in Poverty

Number Lifted Out of Poverty by Social Security

Excluding Social Security

Including Social Security

Alabama

49.2

10.9

244,000

Alaska

28.9

5.3

11,000

Arizona

40.3

9.1

223,000

Arkansas

53.0

12.7

140,000

California

37.4

8.1

1,148,000

Colorado

37.1

9.9

132,000

Connecticut

40.8

6.9

153,000

Delaware

40.3

6.6

39,000

District of Columbia

37.4

15.6

14,000

Florida

46.4

10.3

1,070,000

Georgia

46.8

10.5

309,000

Hawaii

27.0

7.4

36,000

Idaho

43.9

7.6

69,000

Illinois

44.7

8.0

514,000

Indiana

49.8

9.1

313,000

Iowa

46.8

6.3

157,000

Kansas

44.5

7.0

128,000

Kentucky

55.0

11.9

229,000

Louisiana

56.7

13.1

241,000

Maine

47.9

8.8

78,000

Maryland

34.1

9.2

161,000

Massachusetts

41.9

9.8

275,000

Michigan

45.9

7.7

492,000

Minnesota

42.9

5.7

234,000

Mississippi

55.4

18.2

130,000

Missouri

47.5

6.8

314,000

Montana

56.0

8.1

62,000

Nebraska

43.6

6.5

77,000

Nevada

37.5

6.5

94,000

New Hampshire

41.5

6.0

57,000

New Jersey

40.2

9.1

343,000

New Mexico

44.3

12.7

77,000

New York

45.0

12.5

813,000

North Carolina

51.7

10.6

461,000

North Dakota

46.1

8.6

29,000

Ohio

46.7

8.0

556,000

Oklahoma

46.9

10.2

177,000

Oregon

47.1

7.9

188,000

Pennsylvania

47.7

8.7

717,000

Rhode Island

41.9

8.3

45,000

South Carolina

50.7

11.0

233,000

South Dakota

43.1

8.2

39,000

Tennessee

49.3

11.6

315,000

Texas

46.8

12.6

860,000

Utah

41.3

6.8

77,000

Vermont

47.8

10.7

30,000

Virginia

39.8

10.1

260,000

Washington

38.0

7.8

219,000

West Virginia

55.8

9.6

120,000

Wisconsin

49.5

8.8

276,000

Wyoming

45.9

8.8

25,000

Source: Center on Budget and Policy Priorities based on data from the U.S. Census Bureau, Current Population Survey, March 2007-2009.

TABLE 3: Social Security Beneficiaries by State and Age, December 2009

Total

Age 65 and Older

Children Under Age 18

Alabama

983,341

603,628

77,421

Alaska

74,678

47,821

7,256

Arizona

1,028,442

730,645

60,002

Arkansas

620,040

386,480

48,425

California

4,835,164

3,488,517

275,719

Colorado

663,894

477,256

36,436

Connecticut

611,276

459,881

30,435

Delaware

167,530

116,913

9,564

District of Columbia

73,093

51,479

4,883

Florida

3,669,375

2,694,725

183,594

Georgia

1,412,978

916,186

103,659

Hawaii

220,491

166,593

11,396

Idaho

258,691

180,265

15,583

Illinois

1,993,199

1,433,411

114,201

Indiana

1,157,821

791,781

71,067

Iowa

574,315

427,910

25,476

Kansas

478,138

344,378

27,072

Kentucky

870,206

526,606

65,771

Louisiana

770,217

489,625

64,442

Maine

293,011

195,853

17,382

Maryland

826,497

598,985

49,498

Massachusetts

1,117,870

796,641

64,843

Michigan

1,905,342

1,283,186

115,516

Minnesota

857,805

629,056

40,494

Mississippi

583,515

349,830

52,689

Missouri

1,137,581

767,694

72,053

Montana

187,197

133,236

9,877

Nebraska

303,880

226,192

15,153

Nevada

390,553

277,638

22,894

New Hampshire

245,563

169,238

15,598

New Jersey

1,440,943

1,069,348

75,891

New Mexico

347,976

234,380

23,888

New York

3,214,780

2,273,704

183,947

North Carolina

1,698,677

1,123,672

105,219

North Dakota

118,493

90,175

5,008

Ohio

2,074,384

1,466,804

110,919

Oklahoma

688,545

463,341

45,713

Oregon

686,777

491,947

30,953

Pennsylvania

2,530,211

1,814,653

133,362

Rhode Island

200,202

141,141

10,982

South Carolina

889,876

578,014

58,268

South Dakota

150,432

113,148

6,956

Tennessee

1,212,968

787,049

82,232

Texas

3,320,462

2,259,018

239,675

Utah

312,029

221,174

23,172

Vermont

124,585

86,174

6,984

Virginia

1,246,366

863,903

75,461

Washington

1,049,039

745,854

52,041

West Virginia

436,445

270,612

28,611

Wisconsin

1,033,096

739,768

51,408

Wyoming

88,514

63,654

4,876

Totala

52,522,819

36,594,122

3,157,987

Source: Social Security Administration, Annual Statistical Supplement, 2010, Table 5.J5, and OASDI Beneficiaries by State and County, 2009. a Includes outlying areas and foreign countries (not shown).

End Notes:

[1] Kathy A. Ruffing and Paul N. Van de Water, Top Ten Facts About Social Security, Center on Budget and Policy Priorities, forthcoming.

[5] Eugene Smolensky, Sheldon Danziger, and Peter Gottschalk, “The Declining Significance of Age in the United States: Trends in the Well-Being of Children and the Elderly Since 1939,” in John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey, eds., The Vulnerable, Washington: Urban Institute, 1988; Gary V. Engelhardt and Jonathan Gruber, “Social Security and the Evolution of Elderly Poverty,” National Bureau of Economic Research Working Paper 10466, May 2004.